(DOWNLOAD) "Palmer v. Reconstruction Finance Corp." by Second Circuit Circuit Court Of Appeals ~ Book PDF Kindle ePub Free
eBook details
- Title: Palmer v. Reconstruction Finance Corp.
- Author : Second Circuit Circuit Court Of Appeals
- Release Date : January 04, 1947
- Genre: Law,Books,Professional & Technical,
- Pages : * pages
- Size : 61 KB
Description
The trustees in reorganization of the New York, New Haven and Hartford Railroad Company, appeal from an order dismissing a petition in which they asked leave to pay off loans made by the Reconstruction Finance Corporation - which we shall call the "R.F.C." - to the railroad with interest at four per cent, instead of at five per cent at which the road had borrowed the money. When the reorganization proceeding was begun on October 23, 1935, the road had already borrowed of the "R.F.C." more than $7,000,000 upon notes bearing interest at five per cent, for which it had put up as collateral an assorted group of securities of the "New Haven System." From November 1, 1933, until shortly after the proceeding began, the "R.F.C." had accepted four per cent instead of five, but it thereafter demanded five per cent as stipulated. The trustees in reorganization tried unsuccessfully a number of times to induce it to go back to the lower rate, and finally on December 21, 1938, Jesse Jones, Esq., chairman of the "R.F.C." wrote them the letter which we quote in the margin. This the trustees never answered, nor did they ever promise to pay the notes, or tender payment. However, the interest upon the collateral proved large enough, not only to meet the interest in full but to make substantial inroads upon the principal; and large parts of the collateral were also sold and applied in further reduction. Over six years after the letter of December 21, 1938, that is on January 29, 1945, the trustees wrote to the "R.F.C.," asking the reduction in the rate from five to four per cent, "retroactive" to the beginning of the proceeding, and stating as their reason that nearly one half of the principal had by then been paid, and that "interest at the foregoing rates has been paid currently." They did indeed mention the letter of December 21, 1938, only to say that the situation had much improved since it was written. The "R.F.C." replied on February 14, refusing to make the "retroactive" reduction, but consenting to the reduction effective January 1, 1945, and from then on this was the agreement; this controversy is over one per cent from October 23, 1935, or thereabouts, to January 1, 1945. Twice more - on July 10, 1945 and on June 18, 1946 - the trustees asked the same "retroactive" reduction, offering to pledge, as additional collateral, securities which they had redeemed from other loans; and both times the "R.F.C." again refused. Shortly after the last of these requests had been denied - on July 12, 1946 - the trustees filed the petition now at bar, basing their claim upon Mr. Joness letter. Their position is double: they allege (1) that they had let pass opportunities to refinance the notes at a lower rate than five per cent, acting in reliance upon the letter; and they allege (2) that it was a unilateral offer to reduce the interest, if they speeded up realization on the collateral, which they did. The only testimony offered to prove that they had in fact let pass any opportunities to refinance the notes in reliance upon the promise, was that of the roads vice-president and comptroller, who, when asked whether the trustees would have tried to refinance the notes, answered: "I think that letter certainly had a very large bearing, and we had all interpreted it that if the loans were paid off in the reorganization proceedings that the 4% interest rate would be made retroactive to the date of the proceedings." The judge held that they had not acted in reliance upon the promise; and that it was, to say the most, exceedingly doubtful whether they could have refinanced the notes for 4% or better.